Council Tax 'Reminder'

[didds]

But it does seem all wrong that they put an effective date, October 13, on it, but then do not seemingly allow you to wait until your personal situation is clearer.

ten0rman

I have reached the tired and cynical conclusion that "they" are incapable of rational thought and make it up as they go along.

didds

[bungeejumper]

"No man is under any obligation to pay more than his fair share, and is fully entitled to reduce his share as much as he can, legally

Tax avoidance is in this category - but HMRC views it slightly differently.

Indeed, the old "no man" ruling (actually Inland Revenue Commissioners v. Duke of Westminster [1936] - https://en.wikipedia.org/wiki/Duke_of_W ... r%27s_Case) is no longer the cast-iron bulwark that it used to be.

One of its tenets was that if something was legal at the time you did it (think, for example, of devious trusts or of putting your money into the Cayman Islands), then the courts couldn't come back to you afterwards to demand that you rescind the arrangement, or that you pay a retrospective tax penalty.

Gordon Brown struck the first blow by ordering the unwinding some blind property trusts that went all the way back to 1986 (on pain of retrospective penalties), but George Osborne finished the job with a new set of requirements that have blown the Duke of Westminster defence properly out of the water. The original intention of the law has been subverted by smart-arse tax planners who exploit every loophole and then invent a few more. The likes of Jimmy Carr are still out there, after all.

So these days the distinction between tax avoidance (legal) and tax evasion (illegal) is all but gone. Instead we’ve got “aggressive tax avoidance”, which is commonly shortened to just plain “avoidance”. Pity, really. A useful distinction has been lost. Dammit, even an ISA is a tax avoidance strategy.

BJ

[ten0rman]

By legally, the sort of thing I'm referring to is making full use of allowances, whether or not you need them; using ISA's; claiming, as I have just done, my part free TV license (I'm 74, and will turn 75 before the TV license renewal), and so on. So in Lootman's case, he did what he was supposed to do, and the LA possibly slipped up according to what I believe Lootman thinks. My attitude is quite clear - I've seen certain people abusing the system, and seemingly get away with it, so now I take everything I can get that's legal. For example, a few years ago I found an allowance named Adult Dependency Increase which was payable along with the State Retirement Pension to any person who was supporting another adult who had no other income. It wasn't advertised, and indeed at the time I found it, there was an end date in sight. Anyway, when I queried it, I found that even though we didn't need it, it was available, so I claimed it. Ok it was taxed but so what, what was left was better in my pocket than the Treasury's.

Whether or not Inland Revenue Commissioners v. Duke of Westminster [1936] is of less use is irrelevant - if it's there, and it's to your advantage, and it's legal, then take it.

Actually, thinking about it a bit further, I'm not really talking about tax avoidance/tax evasion. But in a simplistic way, I'm advocating that it's everyones right to claim back whatever they can and thus reduce the effect of taxation.

ten0rman

[Lootman]

So these days the distinction between tax avoidance (legal) and tax evasion (illegal) is all but gone. Instead we’ve got “aggressive tax avoidance”, which is commonly shortened to just plain “avoidance”. Pity, really. A useful distinction has been lost. Dammit, even an ISA is a tax avoidance strategy.

But surely there is still a practical distinction in that evasion will always be prosecuted, if it is discovered. Whereas an avoidance strategy may or may not be challenged by HMRC, probably depending on whether HMRC thinks a court (UK or EU) would support it.

So take for example offshore rollup funds and accounts. These are deliberately structured not to pay out interest, dividends, gains etc. but rather roll them all up into the fund/account value. In that way there is never a taxable event until a withdrawal is made or the fund/account closed.

Such devices are clearly designed to avoid tax, at least for as long as withdrawals can be deferred. Moreover they are even sometimes set up so that the first withdrawals are of the original capital, so again no tax is due.

As far as I know HMRC has not challenged UK residents who use these. You could stash a billion in one of them and not owe a penny in tax for years. In fact you would not even need to disclose or declare the existence of that account.

HMRC appears to take the view that such avoidance is OK, and that it is happy merely to tax those eventual distributions as income tax. And of course by then you may no longer be a UK resident, or be in a much lower tax bracket.

[bungeejumper]

So take for example offshore rollup funds and accounts. These are deliberately structured not to pay out interest, dividends, gains etc. but rather roll them all up into the fund/account value. In that way there is never a taxable event until a withdrawal is made or the fund/account closed.

Such devices are clearly designed to avoid tax, at least for as long as withdrawals can be deferred. Moreover they are even sometimes set up so that the first withdrawals are of the original capital, so again no tax is due.

Absolutely. The day you bring the proceeds back into the UK, you pay tax on it. I am (BJ tries to sound hopeful) confident that Michael Ashcroft is playing to those rules. Darn it, otherwise an investor like Her Maj could presumably find herself spending time at her own pleasure

I'm not so sure about the practice of pulling out the capital first and rolling up the earnings until another day, though. That has all the hallmarks of a carefully-contrived aggressive-avoidance strategy, and I'd expect HMRC to be right onto it.

HMRC appears to take the view that such avoidance is OK, and that it is happy merely to tax those eventual distributions as income tax. And of course by then you may no longer be a UK resident, or be in a much lower tax bracket.

HMRC isn't very happy about any of this, actually. Take a look at the way it's cracking down on offshore employee trusts that pay their clients in the form of non-repayable loans, and you'll get the flavour. And then ask the US Senate how it feels about the same issue. Can't last much longer, IMHO.

Tell you what, let's compare notes after the Budget!

BJ

[Lootman]

I'm not so sure about the practice of pulling out the capital first and rolling up the earnings until another day, though. That has all the hallmarks of a carefully-contrived aggressive-avoidance strategy, and I'd expect HMRC to be right onto it.

As I recall reading about such a scheme, the way it was set up was an umbrella fund with different fund classes. Movements between the different fund classes were not a taxable event - only withdrawals.

So fund class A was the original capital, whilst all interest, dividends, gains etc. were directed to fund class B, C, D etc.

A clever idea, no doubt, but as you say that might be a contrivance too far for the tax man.

[DiamondEcho]

Lootman, I am reminded of what the good judge said I don't know how many years ago, basically that "No man is under any obligation to pay more than his fair share, and is fully entitled to reduce his share as much as he can, legally." (Ok not very well put but you all know what I mean.)

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

'by: Judge Learned Hand (1872-1961), Judge, U. S. Court of Appeals Source: in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)'
http://quotes.liberty-tree.ca/quote_blo ... Quote.6BF7

[DiamondEcho]

I am taking the matter of 'tax roll-up funds' off into another topic, hope that's ok Sounds interesting, and I'd like to understand more about them.

viewtopic.php?f=49&t=8433

[ten0rman]

DiamondEcho,

That was not the source I had in mind. Try this one:

James Avon Clyde, Lord Clyde

During this time Lord Clyde gave this famous quote (in taxation circles) in the case of Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax Case 754, at 763,764:[10]

"No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue"


ten0rman

[PinkDalek]

To provide the source:

https://en.wikipedia.org/wiki/James_Avo ... yde#Career

[XFool]

An update.

They have finally got round to cashing the five cheques, presumably also the four postal orders. (Won't do that again, cost me £10 for £8 in postal orders!)

Have not as yet received my receipt. Or a reply to my letter.

[ten0rman]

Or a reply to my letter.

On the two occasions I have complained to the council, I've always written directly to the top man, chief executive or whatever he/she's called. That has always achieved a desired result, and it's made sure that the top brass know about it and it hasn't been hushed up by the lower minions.

Same thing when I've had problems with other organisations - it seems to work wonders.

Off course, you do have to have a reasonable case.

ten0rman

[staffordian]

...Have not as yet received my receipt.

Check your bill.

We used to say "A receipt for postal payments will not be issued unless requested" or words to that effect. Our postage bill (and so the council tax!) would have increased if a receipt was sent by default for every payment received.

So unless you specifically asked for a receipt, you may wait in vain for one.

[XFool]

So unless you specifically asked for a receipt, you may wait in vain for one.

Oh I did specifically ask for one and included a SAE. As requested.

[XFool]

The final instalment?

I have at last received my 'receipt' from a council Local Taxation Officer for payment by "cheque" of my second bi-annual Council Tax due. No mention of my unorthodox payments, just the usual blah blah about not sending out "another demand notice" for the second payment plus the usual about how I "may wish to pay the bi-annual payments via direct debit" etc.

Funny thing is, although I sent a SAE as requested, they didn't use that but sent it by normal council second class franked envelope.

You can't really ever win, can you? I suppose nowadays, with low though rising interest rates, there isn't much point in paying these things other than by single annual payment; it's just habit from the past - a time when things seemed to make more sense. Or did they?

[staffordian]

You can't really ever win, can you? I suppose nowadays, with low though rising interest rates, there isn't much point in paying these things other than by single annual payment; it's just habit from the past - a time when things seemed to make more sense. Or did they?

You'll know the Council prefer direct debit, as it's not only cheaper for them but it gives them greater certainty on cashflow, but having said that, in my previous life I was very glad people still wanted to come in and pay cash or cheque, or post in cheques, as it kept my post team and cashiers in work. So folks paying ten instalments were very welcome

Glad I retired when I did though, as the cashiers have now been replaced by a couple of "paying in machines" and the post team have been subsumed into a larger council wide image processing division.

[redsturgeon]

a time when things seemed to make more sense. Or did they?

I guess that many things that used to make sense when we did them years ago, now no longer make sense.

John

[XFool]

a time when things seemed to make more sense. Or did they?

I guess that many things that used to make sense when we did them years ago, now no longer make sense.

Yes. What I probably meant was a time when things seemed more considerate and reasonable; more of a service. Such as, if you could pay bi-annually, they actually sent out a simple reminder for the second payment rather than a threat of legal action if you didn't immediately pay. They used to, but this change dates from the original Poll Tax by my memory.

Some companies, such as the water company, still manage to implement the reasonable approach.